Business confidence up in Dubai, says DED survey

Dubai business confidence grew in the second quarter of 2016 amid a rise in demand, according to the Department of Economic Development (DED).

Expectation over new projects, improved market conditions, higher demand due to the festival season and new customers had a positive impact on the emirate’s overall business outlook, said the DED’s quarterly business survey.

The composite Business Confidence Index (BCI) of Dubai firms rose to 117.5 points during Q2 of 2016, up 7.4 points from the same quarter of 2015 and also higher than the Q1 2016 index score of 116.5.

Of 500 firms surveyed, as 44 percent expected sales and volumes situations to improve and 44 percent expecting stability to prevail. While 48 percent of the businesses in Dubai expect their sales volume to increase in the third quarter of 2016, 37 percent anticipated volumes to hold steady.

A comparison of the Q3 and Q2 forecasts shows that all parameters except the selling prices index maintained a steady trend. The net balance for selling prices increased from one percent for Q2 to five percent for Q3 on the back of rising raw material costs and projections of improvement in demand. The net balance for sales volume stands at 33 percent for Q3, higher than the 27 percent for Q3 in 2015 and 31 percent for Q2 in 2016.

The manufacturing sector was the most optimistic across all parameters – revenues, volumes, selling prices, employment, profitability and new purchase orders for Q3 – said the report.

Confidence on receiving new orders, contracts or projects both from the government and private sectors and an increase in demand are the major factors keeping manufacturers buoyant compared to their counterparts in the trading and services sectors, it said. Within the manufacturing sector, furniture and plastics manufacturers hold the strongest outlook for volumes.

The transportation sub-segment of the services sector is the most optimistic for Q3, while the travel and hospitality segment is the least optimistic about their volumes. Within the trading sector, the most optimistic segments are computers, auto, construction materials and food and beverages.

DED’s Q2 2016 April-to-June survey covered 500 companies in Dubai, which were asked to indicate if they anticipated an “increase”, “decrease”, or “no change” in key indicators such as sales revenues, selling prices, volumes sold, profits and number of employees.